How to negotiate an MSA

Master services agreements (MSAs) set out many of the terms that will govern a future commercial relationship - naturally there'll be disagreements along the way. How can modern contracting help?

This deep dive explores who MSAs affect, how parties might negotiate them and ways to make this process easier. Use the navigation below to find out more, or explore our deep dives on other contracts, like NDAs.

What's an MSA? | Who do MSAs affect? | How to approach MSA negotiations | How to make MSA negotiation easier | Useful features | Learn more

What’s an MSA?

In a master services agreement (MSA), a business and its customer agree the majority of the terms that will govern their future relationship. This type of contract is extremely common in high-velocity sales organizations – especially SaaS businesses – as it enables reps to send out order forms with key commercial terms for quick decisions, while the lengthy legal terms are appended in the MSA. 

Who do MSAs affect?

The stakeholders affected by an MSA will vary depending on the business. For example, the MSAs we typically see in Juro are the concern of various teams at different points:

  • Salespeople. Account executives and sales managers append MSAs to the order forms they send out to prospective customers - for example, other businesses buying SaaS. Salespeople are incentivized to get deals over the line, and if contracts aren't created and controlled from templates, this can result in unsanctioned deviations to agreement terms.

  • Legal counsel. A company’s in-house legal team typically ‘owns’ the commercial terms, defining and approving any changes to standard positions.

  • Approvers. Many different teams in the business might need approval oversight of MSAs, including sales leadership, finance and perhaps even C-suite, depending on the impact of the contract.

  • Authorized signatories. Who this is will vary from company to company.

  • Customers. Potential customers signing up to the terms within the MSA are, of course, key stakeholders in the contract

How to approach MSA negotiations

There’s a spectrum of negotiation for all contracts, with minimal to low negotiation at one end and extremely heavy negotiation at the other. At the furthest point of the low end of this spectrum are contracts like NDAs, which attract almost no negotiation. Legal teams often choose this kind of document as an early candidate for self-serve automation, as the risks of letting commercial colleagues create their own NDAs (if the workflow is robust) are relatively low.

At the other end of the spectrum are the highest-value contracts, like those governing a huge merger or acquisition. These kind of contracts are unlikely to be part of an automated workflow - they’ll probably be negotiated face-to-face, over months or even years, with a wet signature marking the end of the process.

MSAs are somewhere in between, but certainly closer to the low-negotiation end. As a business, being firm with the positions in your MSA has the benefit of keeping things simple and minimizing risk. B2C companies don’t really allow for negotiation of MSAs, due to the volumes involved and the asymmetry in the power dynamic, but B2B companies are more willing to deviate from standard terms to get deals over the line - with legal’s approval, of course.

In the context of SaaS and similar commercial MSAs, the following terms and clauses are some of those most commonly queried, negotiated or rejected:

  • Service levels (uptime)

  • Termination rights

  • Indemnities

  • Reporting obligations

  • Auto-renewal

  • Data removal when the service ends

  • Financial elements (like interest rates, exchange rates and so on)

  • Use of IP (logos on the vendor website, for example)

  • Data use (aggregation and anonymization, for example)

Which of these you’re prepared to flex on will ultimately be a call for the legal team. 

How can I make MSA negotiation easier?

MSAs that are created and managed across several different systems - typically Word, email and DocuSign - can lead to some serious risks, as changes (and the audit trails behind them) often don’t survive the transition from one system or version to another. An automated workflow, with legal defining the template and approving any changes through negotiation, is safer and more efficient.

If reps change terms in Salesforce, for example, and this isn’t reflected in your contracts system, and the CFO and general counsel use each as their source of truth respectively, then forecasting will immediately run into trouble

Playbooks are a well-established way of setting out the commercial positions you’re happy to accept in your MSA. If these are playbooks are robust and well socialized, legal teams can (within a contract collaboration platform) empower sales teams to negotiate without the need to be involved. This gives legal visibility and approval rights without adding friction.

If you allow MSA terms to be negotiated and your business uses a CRM, make sure you have two-way integration so that data always synced. If reps change terms in Salesforce, for example, and this isn’t reflected in your contracts system, and the CFO and general counsel use each as their source of truth respectively, then forecasting will immediately run into trouble. Similarly, version control issues between the two systems will cause frustration, uncertainty and wasted time for both legal and commercial teams.

Find out more about automating MSAs in our free eBook, 'Contract automation: start small, win big'.

Useful features for negotiating an MSA?

If you’re looking to use software to collaborate on and manage MSAs - and you should! - then these features will help to make that negotiation easier:

  • Internal and external commenting and collaboration, so that internal colleagues and external counterparties can see, make and track changes to the contract.

  • Visual timeline and audit trail, so you can see when counterparties have viewed the contract.

  • Full audit history, so you can easily compare different versions.

  • Full OCR text search, because MSAs can be long, and this will help to surface key terms and documents quickly.

  • Automated reminders, so you don’t miss renewals dates – particularly if they were changed during negotiation.

  • Two-way integration with CRM, so that sales and legal data is always in sync across systems.

  • Integration with Slack and email, so that parties can be notified as negotiation happens.

If your contract workflow is supercharged with all these features, it will enable commercial and business teams to collaborate better on MSA negotiations, leading to a faster time-to-close and - hopefully - happiness on both sides of the contract.

Is negotiating MSAs a pain point for your business? Is your SaaS company or marketplace growing so fast that the contract process is out of control, with friction pre-signature and a lack of visibility post-signature?

If so, try Juro and see if you could benefit from a contract collaboration platform that enables businesses to agree and manage contracts all in one unified workspace.

Topics: MSA

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